Simple Interest Calculator

A savings scheme or a short-term loan quoting a flat "simple interest" rate needs a straightforward calculation — no compounding involved, just interest calculated once on the original amount for the whole period. This calculator works out exactly how much that comes to.

How simple interest differs from compound interest

Simple interest is calculated only on the original principal amount, for the entire time period, using the formula: Interest = Principal × Rate × Time ÷ 100. Unlike compound interest, it doesn't add earned interest back into the principal for further interest calculation each period — the interest earned in year one doesn't itself earn interest in year two. This makes simple interest calculations lower than compound interest over the same rate and period, and it's typically used for shorter-term loans or specific savings products that are explicitly described as "simple interest."

Where simple interest calculations are used

Working out returns on a fixed-term savings certificate or bond that specifically advertises a simple interest rate. Calculating interest owed on a short-term personal loan between individuals with an agreed flat rate. Checking the interest portion of a car loan or similar loan product that uses simple interest rather than a reducing-balance EMI structure.

Frequently Asked Questions

How do I know if my loan or savings account uses simple or compound interest? This is usually stated explicitly in the product's terms — "simple interest" is calculated only on the principal, while "compound interest" or "compounded annually/monthly" adds interest back to the principal periodically; check with the specific bank or scheme's documentation.

Can the time period be less than a year, like 6 months? Yes — enter the time in years as a decimal, so 6 months would be entered as 0.5.

Is my financial data saved anywhere? No — the calculation runs entirely in your browser using JavaScript; nothing is stored or transmitted.